SenseTime postpones plan for potential blockbuster biometrics IPO, seeks private funding
SenseTime has decided to postpone its Hong Kong IPO of up to $750 million following the global aftermath of the coronavirus outbreak and the facial recognition unicorn’s inclusion on the U.S. Entity List, and is looking to secure $1 billion in private funding, writes Nikkei Asian Review.
The company has so far received financial support from Alibaba Group Holding, Qualcomm and SoftBank Group, and worked on the IPO with Chinese investment bank China International Capital Corp.
Citing a Reuters report, Nikkei says SenseTime had forecast a 200 percent revenue increase in 2019, however it reported negative cash flow and is now in pre-IPO fundraising.
SenseTime’s business model includes biometric facial recognition, robot delivery, smart health and education.
“The whole episode with the U.S. didn’t cast a good light on the industry,” a person familiar with the plans allegedly said. “While Megvii has been cleared, we think we would have a better public market outcome if we wait. Besides, current market conditions have effectively shut the IPO market for a while.”
“We do not have any new financial plans or information to share at this stage,” SenseTime wrote in an email sent to Nikkei.
With the coronovarius outbreak, share sales from IPOs in Hong Kong have dropped 93 percent compared to a year earlier, financial market platform Dealogic reports. The company has responded by rolling out facial recognition technology capable of identifying people wearing facemasks.
CB Insights valued SenseTime at $4.5 billion last year, despite CEO claims cited by Bloomberg that its valuation topped $7.5 billion.
SenseTime co-founder Tang Xiaoou said in a 2018 presentation at MIT that the startup surpassed Facebook in facial recognition success rate, reaching 99 percent.